Studies show that commercial buildings have gotten larger while their quantity has also increased. According to the EIA, quoting the CBECS, there is a 6% increase in the number of commercial buildings. Their size, meanwhile, has increased by 11%.
But what does this mean for you when you're negotiating your next commercial lease agreements? Among many things, it means that there are more buildings out there than ever waiting for the right lease terms for you to start your commercial endeavor.
If you're curious about negotiating commercial leases, we're here to help. Read on to learn more about commercial lease terms and everything you'll need to master the topic.
What Is a Commercial Lease Agreement?
To start, what is a commercial lease agreement? Thankfully, the name says it all for us: a commercial lease agreement is the lease agreement for a commercial property. Investopedia defines a lease as a "contract outlining the terms under which one party agrees to rent an asset."
That is to say, you'll need to have commercial lease terms if you're renting a building for business. These terms can often vary heavily compared to the more common residential lease terms.
Types of Commercial Lease Agreements
Commercial lease agreements come in several different forms. Most often, that includes:
- Net Lease
- Gross Lease
- Modified Gross Lease
A Net Lease is one where the tenant pays some or all expenses aside from rent. Those expenses can include utilities, repairs, renovations, and more.
A Gross Lease, is one where the tenant pays a set amount with the landlord covering other expenses. That means your costs won't change month to month, but you may need to negotiate the amount heavily with the property owner.
A Modified Gross Lease is an agreement where both parties share responsibility for extra property expenses. These are often heavily documented and litigated to ensure neither party is trying to get more out of the other.
Function of a Lease Agreement
What's the function of a lease agreement in Orlando? Typically, a commercial lease agreement is more complex than others. They also are longer leases and tend to favor the landlords.
For tenants, a lease management agreement helps to outline all things you'll need for the building. These can include:
- Property details
- Rent amount
- Your security deposit
- Length of the lease
- Possibility of renewal
There are many more factors that may appear as well. Generalizing lease agreements is difficult because they're written and dedicated on a case-by-case basis.
Because CLAs offer fewer protections for tenants, it's important to document everything in case of a breach of lease. A professional property manager can help you outline things like property taxes, insurance, maintenance costs, and more. Make sure you're making an informed choice before you sign any commercial lease agreements.
Knowing How to Negotiate Your Agreements
Commercial lease agreements can seem daunting, but with the right research, you'll demystify them swiftly. Always make an informed decision and don't hesitate to contact experts to ensure you aren't being taken advantage of.
At PMI Property Alliance, we're a locally owned and operated branch of an illustrious 20-year franchise. We provide prompt, friendly, and professional services to both tenants and property owners. Contact us to see how we can increase the value of your property today.
